Members of Congress finally seem to be addressing an issue that affects thousands of college graduates in a practical manner: The Student Loan Repayment Assistance Act allows an individual’s employer to directly participate in student loan repayment. It is expected to cut student loan repayment time in half if employers choose to match employee student loan payments. Since employers receive a tax credit for subsidizing employee loans, they will better be able to provide for their employees and companies. Furthermore, as Rep. Scott Peters (D-Calif.) told the UCSD Guardian, the program will likely prevent defaults on loans from happening.
Most countries in the world subsidize the university education of residents, making quality education accessible to individuals, regardless of how much they can afford to pay. These universities are still highly competitive and many of these countries surpass the U.S., which ranked 14th in the Pearson global learning curve rankings. In Germany (which is two spots ahead of the U.S. in that ranking), the federal system offers free higher education for all Germans and international students who wish to attend. In France, the price to pass SAT-type exams is minimal compared to what an average U.S. student pays to even just apply to college. Although the government systems of these other countries may differ significantly from the U.S., it is evident that funding education is a top priority. With the Student Loan Repayment Assistance Act, the U.S. will hopefully not only rise in rankings but also enable students to obtain an affordable post-secondary education.
And while this solution will likely benefit thousands of students, as well as help the economy as a whole, it should also be broadened to include students who may choose to be self-employed. As Peters said, innovation is one of the driving forces of the economy. Thus, innovation and entrepreneurship should be fostered and propagated through a form of credit that would lighten the loan burden on these individuals.
The original version of the bill prohibits employers from discriminating loan contributions based on an employee’s salary. It also stipulates that loan contributions cannot affect the amount an individual is paid; if an employer does this, the payment being made will be credited to the employee. Because businesses are for-profit institutions, it is important the government protects college graduates from being taken advantage of since the skills and knowledge college graduates bring is imperative to the success of a company. Also, the bill requires an individual to pay off loans at a rate of at least $50 per month; thus, the burden is not left entirely on the employer.
Although the bill was introduced last August, it experienced a pushback because it stipulated that the grace period for repaying loans should be extended. According to Peters, this was perceived as sending a mixed message and was cut out of the bill. However, this provision may be unnecessary since individuals who experience unemployment can defer their loan payments for up to three years.
While the details still need smoothing, we do appreciate Rep. Peters’ efforts on the issue, however it works out. In the end, perhaps this will be the legislation that finally helps resolve the student debt crisis, or perhaps it will fall flat like its predecessors.